Yes, it really is ALL ABOUT THE OIL

QUOTE

Hard to Deny: Iraq Is All About the Oil

By Michael Schwartz, Tomdispatch.com

Posted on May 8, 2007, Printed on May 8, 2007

http://www.alternet.org/story/51572/

The following is a story by Michael Schwartz with an introduction by Tom

Engelhardt.

In the run-up to the invasion of Iraq in 2002-2003, oil was seldom

mentioned. Yes, Deputy Secretary of Defense Paul Wolfowitz did describe the

country as afloat "on a sea of oil" (which might fund any American war and

reconstruction program there); and, yes, on rare occasions, the President

did speak reverentially of preserving "the patrimony of the people of

Iraq" -- by which he meant not cuneiform tablets or ancient statues in the

National Museum in Baghdad, but the country's vast oil reserves, known and

suspected. And yes, oil did make it prominently onto the signs of war

protestors at home and abroad.

Everybody who was anybody in Washington and the media, not to speak of the

punditocracy and think-tank-ocracy of our nation knew, however, that those

bobbing signs among the millions of antiwar demonstrators that said "No

Blood for Oil" were just so simplistic, if not utterly simpleminded. Oil

news, as was only proper, was generally relegated to the business pages of

our papers, or even more properly -- since it was at best but one modest

factor among so very many in Bush administration calculations -- roundly

ignored.

Admittedly, the first "reconstruction" contract the administration issued

was to Halliburton to rescue that country's "patrimony," its oil fields,

from potential self-destruction during the invasion, and the key

instructions -- possibly just about the only instructions -- issued to U.S.

troops after taking Baghdad were to guard the Oil Ministry. Then again,

everyone knew this crew had their idiosyncrasies.

Ever since, oil has played a remarkably small part in the consideration of,

coverage of, or retrospective assessments of the invasion, occupation, and

war in Iraq (unless you lived on the Internet). To give but a single

example, the index to Thomas E. Ricks' almost 500-page bestseller, Fiasco:

The American Military Adventure in Iraq, has but a single relevant entry:

"oil exports and postwar reconstruction, Wolfowitz on, 98."

Yet today, every leading politician of either party is strangely convinced

that the key "benchmark" the government of Prime Minister Nouri al-Maliki

must pass to prove its mettle is the onerous oil law, now stalled in

Parliament, that has been forced upon it by the Bush administration. In the

piece below, Tomdispatch regular Michael Schwartz follows the oil slicks

deep into the Gulf of Catastrophe in Iraq. He offers a sweeping view of the

role oil, the prize of prizes in Iraq, has played in Bush administration

considerations and what role the new oil law is likely to play in that

country's future. -- Tom Engelhardt

The struggle over Iraqi oil has been going on for a long, long time. One

could date it back to 1980 when President Jimmy Carter -- before his Habitat

for Humanity days -- declared that Persian Gulf oil was "vital" to American

national interests. So vital was it, he announced, that the U.S. would use

"any means necessary, including military force" to sustain access to it.

Soon afterwards, he announced the creation of a Rapid Deployment Joint Task

Force, a new military command structure that would eventually develop into

United States Central Command (Centcom) and give future presidents the

ability to intervene relatively quickly and massively in the region.

Or we could date it all the way back to World War II, when British officials

declared Middle Eastern oil "a vital prize for any power interested in world

influence or domination," and U.S. officials seconded the thought, calling

it "a stupendous source of strategic power and one of the greatest material

prizes in world history."

The date when the struggle for Iraqi oil began is less critical than our

ability to trace the ever growing willingness to use "any means necessary"

to control such a "vital prize" into the present. We know, for example,

that, before and after he ascended to the Vice-Presidency, Dick Cheney has

had his eye squarely on the prize. In 1999, for example, he told the

Institute of Petroleum Engineers that, when it came to satisfying the

exploding demand for oil, "the Middle East, with two thirds of the world's

oil and the lowest cost, is still where the prize ultimately lies."

The mysterious Energy Task Force he headed on taking office in 2001 eschewed

conservation or developing alternative sources as the main response to any

impending energy crisis, preferring instead to make the Middle East "a

primary focus of U.S. international energy policy." As part of this focus,

the Task Force recommended that the administration put its energy, so to

speak, into convincing Middle Eastern countries "to open up areas of their

energy sectors to foreign investment" -- in other words, into a policy of

reversing 25 years of state control over the petroleum industry in the

region.

The Energy Task Force set about planning how to accomplish this historic

reversal. We know, for instance, that it scrutinized a detailed map of

Iraq's oil fields, together with the (non-American) oil companies scheduled

to develop them (once the UN sanctions still in place on Saddam Hussein's

regime were lifted). It then worked jointly with the administration's

national security team to find a compatible combination of military and

economic policies that might inject American power into this equation.

According to Jane Mayer of The New Yorker, the National Security Council

directed its staff "to cooperate fully with the Energy Task Force as it

considered the 'melding' of two seemingly unrelated areas of policy: 'the

review of operational policies towards rogue states,' such as Iraq, and

'actions regarding the capture of new and existing oil and gas fields.'"

While we cannot be sure that this planning itself was instrumental in

setting the U.S. on a course toward invading Iraq, we can be sure that

plenty of energy was being expended in Washington, planning for the

disposition of Iraq's massive oil reserves once that invasion was

successfully executed.

In 2002, just a year after Cheney's Task Force completed its work, and

before the U.S. had officially decided to invade Iraq, the State Department

"established a working group on oil and energy," as part of its "Future of

Iraq" project.

It brought together influential Iraqi exiles, U.S. government officials, and

international consultants. Later, several Iraqi members of the group became

part of the Iraqi government. The result of the project's work was a "draft

framework for Iraq's oil policy" that would form the foundation for the

energy policy now being considered by the Iraqi Parliament.

The Prize

The specific prize in Iraq is certainly worthy of almost any kind of

preoccupation. Indeed, Iraq could someday become the most important source

of petrochemical energy on the planet.

According to the U.S. Energy Information Administration, Iraq possesses 115

billion barrels of proven oil reserves, third largest in the world (after

Saudi Arabia and Iran). About two-thirds of its known oil reserves are

located in Shia southern Iraq, and the final third in Kurdish northern Iraq.

However, in energy terms, only about 10% of the country has actually been

explored and there is good reason to believe that modern methods -- which

have not been applied since the beginning of the Iraq-Iran War in 1980 --

might well uncover magnitudes more oil. Estimates of the possible new finds

offered by officials of various interested governments range from 45 billion

to 214 billion additional barrels, depending on the source; but some

non-governmental experts see the final treasure exceeding 400 billion

barrels. If the latter figure is correct, then Iraq would likely become the

world's largest source of oil.

For the most part, Iraq's petroleum has "attractive chemical properties;"

that is, its oil is considered to be of very high quality. Moreover, both

its current fields and many of the potential new discoveries would be

extremely cheap to access, if security weren't such a problem today in Iraq.

James Paul of the international policy monitoring group, the Global Policy

Forum, offers this positive view:

According to Oil and Gas Journal, Western oil companies estimate that they

can produce a barrel of Iraqi oil for less than $1.50 and possibly as little

as $1.... This is similar to production costs in Saudi Arabia and lower than

virtually any other country.

With the price of a barrel of crude oil today above $64 a barrel, the

potential for profits is stupendous and the only question is: Who will

pocket them -- the oil companies or the Iraqi government -- and, if the

former, which oil companies those will be? It is not inconceivable that any

major oil companies able to claim a large portion of the Iraqi oil spoils

could double, triple, or even quintuple their already gigantic global

profits.

Under Saddam Hussein, Iraqi oil never fulfilled the potential of even its

proven oil fields. A modest goal for the country's oil industry would have

been producing 3.5 million barrels per day, but the temporary disruptions

caused by the Iraq-Iran War and the more permanent ones caused by UN

sanctions imposed after the Gulf War in 1991 severely limited production.

From the late 1990s until the American invasion in 2003, Iraq averaged

around 2.5 million barrels per day.

Knowledge of this level of underproduction was certainly one factor in

Deputy Secretary of Defense Paul Wolfowitz's pre-war prediction that the

administration's invasion and occupation of Iraq would pay for itself; he

hoped for a quick postwar increase in production to 3.5 million barrels per

day or, at the $30 per barrel price of oil at that time, close to $40

billion per year in revenues.

An expected expansion in production levels (once the oil giants were brought

into the mix) to perhaps 6.5 million barrels, through the development of new

oil fields or more efficient exploitation of existing fields, had the

potential to more than cover the expected American short-term military costs

and leave the new Iraqi government flush as well.

This, then, was the allure of melding energy policy and military policy, as

Cheney's energy group and allied administration officials envisioned it.

The Initial Campaign to Capture Iraqi Oil

With all this history, the particular way the U.S. sprang into action as

soon as its forces arrived in Baghdad was hardly surprising. While American

troops simply stood by as unrestrained looting severely damaged the

dawn-of-civilization treasures in the National Museum, compromised the

ability of hospitals to deliver health care, and destroyed many government

offices, large numbers of American soldiers were deployed to protect the Oil

Ministry and its associated holdings. This effort was certainly emblematic

of the newly established occupation's priorities.

Not long after President Bush declared "major combat operations in Iraq have

ended" under a "Mission Accomplished" banner on the deck of the aircraft

carrier, the USS Abraham Lincoln, Paul Bremer, the new head of the American

occupation, promulgated a series of laws designed, among other things, to

kick-start the development of Iraqi oil. In addition to attempting to

transfer management of existing oil facilities (well heads, refineries,

pipelines, and shipping) to multinational corporations, he also set about

creating an oil-policy framework, unique in the region, that would allow the

major companies to develop the country's proven reserves and even to begin

drilling new wells.

All these plans were, however, quickly frustrated, both by the growing Sunni

insurgency and by civil resistance. Iraq's oil workers quickly unionized --

even though Bremer extended Saddam's prohibition on unions in state-owned

companies -- and effectively resisted the transfer of management duties to

foreign companies.

In one noteworthy moment, the oil workers actually refused to take orders

from Bechtel officials in the oil hub of Basra, thus preserving their own

jobs as well as the right of the Iraqi state-owned Southern Oil Company to

continue to control the operation in that region. Bechtel's management

contract was subsequently voided.

At the same time, the growing insurgency, acting on a general Iraqi

understanding that a major goal of the occupation was to "steal" Iraqi oil,

systematically began to attack the oil pipelines that traveled through the

Sunni areas of the country. Within a few months, all oil exports in the

northern part of Iraq were interrupted -- and the northern export pipelines

have remained generally unusable ever since.

To resistance of various sorts must be added the "contribution" of the major

American corporations involved in "reconstructing" Iraq, notably Halliburton

and Bechtel. These crony corporations, with close ties to the Bush

administration, accepted huge fees to rehabilitate dilapidated or damaged

oil facilities. Almost without fail, they chose not to repair existing

plants locally or to employ the raft of skilled Iraqi technicians who had

used remarkable ingenuity in maintaining these facilities during a dozen

years of UN sanctions.

Working under cost-plus agreements that guaranteed a fixed profit rate no

matter how much an operation ultimately cost, they preferred instead to

install expensive new proprietary equipment. Then, in the absence of any

outside oversight, they ran up huge expenses and frequently failed to

complete their contracts, leaving the oil facilities they were servicing in

states of disrepair or partial repair -- and equipped with technology that

local technicians could not service.

Meanwhile, the major oil companies refused Bremer's invitation to invest

their own money in Iraqi projects, pointing out the obvious -- that the

insurgency and the spreading chaos made such investments unwise. In

addition, they were well aware that Bremer's regime in Baghdad lacked clear

authority to sign contracts with them.

This, in turn, meant that their investments might be in jeopardy once a

legitimate government took power. When technical sovereignty was finally

handed over to an appointed Iraqi government headed by the CIA's favorite

Iraqi exile, Iyad Allawi, in June 2004, the new premier embraced Bremer's

policy, but to no avail. The international oil companies were no more

impressed with his future than they had been with Bremer's. Like Wolfowitz,

they knew that Iraq "floats on a sea of oil"; unlike him, they were no

dreamers. They weren't willing to risk their capital in the dangerous and

legally ambiguous circumstances then prevailing.

As a result, the first two years of Bush administration efforts to "access"

Iraqi oil failed -- and dismally so at that. Average production never

exceeded the bottom-of-the-barrel 2.5 million barrels Saddam's regime

managed to extract on its worst days. By 2006, production had slipped below

2 million barrels per day.

Dealing with the Iraqi Government

It is difficult to judge how much Bremer's inability to implement the

pre-planned oil policy contributed to the Bush administration decision to

reverse its plans for Iraqi "democracy" -- which, as Juan Cole has pointed

out, involved council-based elections, an electorate restricted to a small

elite, and Bremer as "a MacArthur in Baghdad for years" -- and push for an

elected Iraqi government. It certainly is true, however, that this change

triggered a campaign aimed at the "capture of new and existing oil and gas

fields."

As soon as the first elections for a temporary Iraqi government were

completed in January 2005 American officials in Iraq began lobbying

forcefully for adoption of the very policy that the State Department's

pre-invasion Future of Iraq project had drafted.

The State Department planners had concluded that Production Sharing

Agreements -- a method that granted multinational oil companies effective

control of oil fields without transferring permanent ownership to them --

would be the basic instrument through which a future "independent" Iraq

would develop new oil fields. Wary by now of being seen as the chief

advocate of this policy, which it so desperately wanted in place, the Bush

administration concocted a strategy that would enlist the international

community in pressuring Iraq to adopt its program.

This was done by making the International Monetary Fund (IMF) a key player

in Iraqi oil policy. Through loans in the 1980s and reparations imposed for

his invasion of Kuwait in 1990, Saddam had accumulated $120 billion in

external debt, the largest per capita debt in the world and a potentially

insurmountable obstacle to economic recovery, even in oil-rich Iraq. One

option available to the new government was to declare this debt "odious," a

technical term in international law referring to debt accumulated by

authoritarian rulers for their own personal or political aggrandizement.

Saddam's expansionist war against Iran, his use of public funds to build

ostentatious monuments and palaces, his transfer of billions to his personal

accounts, and his failure to maintain the infrastructure of the country all

were excellent evidence that the debt was indeed odious; and the U.S.

claimed as much for almost $40 billion of it, held by 19 industrialized

countries known as the Paris Club. Instead of seeking to cancel this debt

(and the remaining $80 billion) entirely, however, the Bush administration

sent James Baker, former Secretary of State under George H. W. Bush, to the

Paris Club to negotiate conditional forgiveness.

The resulting agreement immediately forgave $12 billion, but left $28

billion on the books. A second $12 billion would be abrogated when the Iraqi

government signed onto "a standard International Monetary Fund program," and

a further $8 billion three years later, after the IMF confirmed Iraqi

compliance. Even if "successful," almost $8 billion would still be

outstanding to the Paris Club -- together with $80 billion not covered by

the agreement.

The "standard International Monetary Fund program," not surprisingly,

included the now familiar American policies regarding Iraqi oil, as well as

the use of Profit Sharing Agreements and a host of other provisions that

would open the Iraqi economy as a whole, and the oil sector in particular,

to investment by multinational corporations.

Among the most punitive of the provisions was a demand for an end to the

economic breadbasket that guaranteed all Iraqi families low prices for fuel

and food staples. In a country with, by 2005, somewhere between 30% and 70%

unemployment, average wage levels under $100 per month, and escalating

inflation, these Saddam-era subsidies meant the difference between basic

subsistence and disaster for a large proportion of Iraqis.

Independent journalists Basav Sen and Hope Chu summarized the new agreement

thusly:

A move that appears on the surface to be beneficial for Iraq -- debt

cancellation -- is being used as a tool of control by the World Bank, the

IMF and the wealthy creditor countries. What is more, it is a tool of

control that will last long after the withdrawal of U.S. combat forces.

Zaid Al-Ali, an international lawyer working on development issues in Iraq,

described the agreement as a "perfect illustration of how the industrialized

world has used debt as a tool to force developing nations to surrender

sovereignty over their economies."

The newly elected Iraqi National Assembly promptly denounced this agreement

as "a new crime committed by the creditors who financed Saddam's

oppression." This forceful expression reflected the opinions of the

Assembly's constituents. After all, 76 percent of Iraqis believed that the

main reason for the Bush administration's invasion was "to control Iraqi

oil."

As it happened, the protest did not prevent that government from endorsing

the deal. Otherwise, it faced the prospect of the U.S. -- which still had

operational control over Iraqi finances -- simply appropriating most of its

revenues for debt service. When the agreement was announced, interim Oil

Minister Thamir Ghadbhan, a British-trained technocrat, publicly protested

the provisions eliminating fuel and food subsidies. He was subsequently

pushed out.

The U.S. then began pressuring the Iraqi government to draft a definitive

petrochemical law that would conform to the IMF guidelines. Given the levels

of resistance to the very idea, this work was conducted in secret and took

until the end of 2006 to complete. As independent journalist Joshua Holland

described the process:

Just months after the Iraqis elected their first constitutional

government, USAID sent a BearingPoint adviser to provide the Iraqi Oil

Ministry 'legal and regulatory advice in drafting the framework of petroleum

and other energy-related legislation, including foreign investment'.... The

Iraqi Parliament had not yet seen a draft of the oil law as of July [2006],

but by that time... it had already been reviewed and commented on by U.S.

Energy Secretary Sam Bodman, who also 'arranged for Dr. Al-Shahristani to

meet with nine major oil companies -- including Shell, BP, ExxonMobil,

ChevronTexaco and ConocoPhillips -- for them to comment on the draft.

Even the Iraqi Study Group, James Baker's Commission, got into the act at

the end of 2006, devoting three pages of its proposal for a partial

redeployment of American forces from Iraq to exhorting the Iraqis to enact a

petrochemical bill that would place its oil reserves in the hands of the

major oil companies.

The Proposed Petrochemical Bill

When the "Draft Hydrocarbon Law" was finally delivered to the Iraqi

Parliament on February 18, 2007, key provisions had already been leaked and

immediately denounced by the full spectrum of the Iraqi opposition. Taking

turns registering dismay were the majority of the Parliament, a wide range

of government officials, the leadership of major Sunni political parties,

the union of oil workers, the Sadrists -- the most powerful Shia grouping --

and the visible leadership of the insurgency.

All this led to many changes in the law, including the removal of all

mention of either privatization or Production Sharing Contracts, which would

have given multinational oil companies 15-25 years of basically unregulated

operational control over Iraqi oil facilities. The amended version in no way

excluded the use of PSAs, but it removed the explosive designation from the

actual wording of the law.

It is worth reviewing the logic of PSAs to understand why the U.S. was so

determined to make them a part of the law, and why many Iraqis were so

ferociously opposed.

Production sharing agreements are generally applied in circumstances where

there is a strong possibility that oil exploration will be extremely costly

or even fail, and/or where extraction is likely to prove prohibitively

expensive.

To offset huge and risky investments, the contracting company is guaranteed

a proportion of the profits, if and when oil is extracted and sold. In the

most common of these agreements, the proportion remains very high until all

development costs are amortized, allowing the investing company to recoup

its investment expenditures (if oil is found), and then to be rewarded with

a larger-than-normal profit margin for the remainder of the contract which,

in the Iraqi case, could extend for up to 25 years.

This is perhaps a reasonably fair, or at least necessary, bargain for a

country which cannot generate sufficient investment capital on its own,

where exploration is difficult (perhaps underwater or deep underground),

where the actual reserves may prove small, and/or where ongoing costs of

extraction are very high.

None of these conditions apply in Iraq: huge reservoirs of easily accessible

oil are already proven to exist, with more equally accessible fields likely

to be discovered with little expense. This is why none of Iraq's neighbors

utilize PSAs. Saudi Arabia, Kuwait, Iran, and the United Arab Emirates all

pay the multinationals a fixed rate to explore and develop their fields; and

all of the profits become state revenues.

The advocates of PSAs in Iraq justify their use by arguing that $20 billion

would be needed to develop the Iraqi fields fully and that favorable PSAs

are the only way to attract such heavy doses of finance capital under the

current highly dangerous circumstances. This assertion seems, however, to be

little more than a smokescreen.

No major oil companies are willing to invest in Iraq now, no matter how

sweet the deal. If order is restored, on the other hand, Iraq would have no

trouble attracting vast amounts of finance capital to develop reserves that

could well be worth in excess of $10 trillion and hence would have no need

whatsoever for PSAs.

Based on leaked information, journalists reported that the PSAs envisioned

by the Iraqi petrochemical law contained extremely favorable provisions for

the oil companies, in which they would be entitled to 70 percent of profits

until development expenses were amortized and 20 percent afterwards. This

would have guaranteed them at least twice the typical profit margin over the

long run and many times that figure during the initial years.

There are other elements in the law (and the possible PSA contracts) that

have also roused resistance inside Iraq. Among the most controversial:

a.. Insofar as PSAs or their legal equivalent were enacted, Iraq would

lose control over what levels of oil the country produced with the potential

to substantially weaken the grip of OPEC on the oil market.

b.. The law would allow the oil companies to fully repatriate all profits

from oil sales, almost insuring that the proceeds would not be reinvested in

the Iraqi economy.

c.. The Iraqi government would not have control over oil company

operations inside Iraq. Any disputes would be referred instead to

pro-industry international arbitration panels.

d.. No contracts would be public documents.

e.. Contacting companies would not be obliged to hire Iraqi workers, and

could pursue the current policy of employing American technicians and South

Asian manual laborers.

Several African countries with vast mineral riches have been subjected to

these sorts of conditions, with large multinational companies extracting

both minerals and profits while returning only a tiny fraction of the

proceeds to the local population. As the resources are taken out of the

ground and the country, the local population actually becomes poorer, while

the potential for future prosperity is drained.

The draft petrochemical law, if enacted and implemented, could ensure that

Iraq would remain in a state of neoliberal poverty in perpetuity, even if

order did return to the country.

The Resistance

The petrochemical law is hardly assured of successful passage, and -- even

if passed -- is in no way assured of successful implementation. Resistance

to it, spread as it is throughout Iraqi society, has already shown itself to

be a formidable opponent to the dwindling power of the American occupation.

The Parliament itself may be the first line of defense. It challenged the

original IMF agreement and has refused to consider the bill for two months,

already missing a March deadline for passage that American politicians of

both parties had pronounced an important "benchmark" by which to judge the

viability of Prime Minister Nouri al-Maliki's government.

In addition, the government officials responsible for administering the oil

industry could prove formidable opponents. Rafiq Latta, a London-based oil

analyst, told Nation reporter Christian Parenti, "The whole culture of the

ministry opposes [the law].... Those guys ran the industry very well all

through the years of sanctions. It was an impressive job, and they take

pride in 'their' oil."

Perhaps most formidable of all is the Federation of Oil Unions, with 26,000

members and allies throughout organized labor. The oil workers overturned

contracts in 2003 and 2004 that would have placed substantial oil facilities

under multinational corporate control; and they initiated a vigorous

campaign against the U.S. sponsored oil program as early as June 2005 --

calling a conference to oppose privatization attended by "workers,

academics, and international civil-society groups."

In January 2006, they convened a convention composed of all major Iraqi

union groups in Amman, Jordan, which issued a manifesto opposing the entire

neo-liberal U.S. program for Iraq, including any compromise on national

control of oil production.

At a second Amman labor meeting in December of 2006, the Federation of Oil

Unions announced its opposition to the pending law even before it was

released. Iraq's trade unions, speaking in a single voice, declared that:

Iraqi public opinion strongly opposes the handing of authority and control

over the oil to foreign companies, that aim to make big profits at the

expense of the people. They aim to rob Iraq's national wealth by virtue of

unfair, long term oil contracts that undermine the sovereignty of the State

and the dignity of the Iraqi people.

When the bill was made public, oil union president Hassan Jumaa denounced it

before yet another protest meeting, stating:

History will not forgive those who play recklessly with our wealth.... We

consider the new law unbalanced and incoherent with the hopes of those who

work in the oil industry. It has been drafted in a great rush in harsh

circumstances.

He then called on the government to consult Iraqi oil experts (who had not

participated in drafting the law) and "ask their opinion before sinking Iraq

into an ocean of dark injustice."

If the oil workers and their union allies decide to organize protests or

strikes, they are likely to have the Iraqi public on their side. Fully

three-quarters of Iraqis believe that the United States invaded in order to

gain control of Iraqi oil, and most observers believe they will surely agree

with the oil workers that this law is a vehicle for that control. Even Iyad

Allawi has now publicly taken a stand opposing it, perhaps the best

indication that opposition will be virtually unanimous.

Finally -- and no small matter -- the armed resistance is also against the

oil law. The Sunni insurgency underscored its opposition by assassinating

Vice President Adel Abdul Mahdi, a major advocate of the pending law, on the

day the bill was made public. The significance of the opposition of the

Sunni insurgency is amplified by the stance of the Sadrists, the most

rebellious segment of the Shia majority. Sadr spokesman Sheikh Gahaith Al

Temimi warned journalist Christian Parenti that while the Sadrists would

"welcome" foreign investment in oil, they would do so only "under certain

conditions. We want our oil to be developed, not stolen. If a bad law were

to be passed, all people of Iraq would resist it."

It seems clear that what the oil law has the power to do is substantially

escalate the already unmanageable conflict in Iraq. Active opposition by the

Parliament alone, or by the unions alone, or by the Sunni insurgency alone,

or by the Sadrists alone might be sufficient to defeat or disable the law.

The possibility that such disparate groups might find unity around this

issue, mobilizing both the government bureaucracy and overwhelming public

opinion to their cause, holds a much greater threat: the possibility of

creating a unified force that might push beyond the oil law to a more

general opposition to the American occupation.

Like so many American initiatives in Iraq, the oil law, even if passed,

might never be worth more than the paper it will be printed on. The

likelihood that any future Iraqi government which takes on a nationalist

mantel will consider such an agreement in any way binding is nil. One day in

perhaps the not so distant future, that "law," even if briefly the law of

the land, is likely to find itself in the dustbin of history, along with

Saddam's various oil deals. As a result, the Bush administration's "capture

of new and existing oil and gas fields" is likely to end as a predictable

fiasco.

Michael Schwartz is a professor of sociology and faculty director of the

Undergraduate College of Global Studies at Stony Brook University.His books

include Radical Protest and Social Structure, and Social Policy and the

Conservative Agenda (edited, with Clarence Lo).